New Brazilian Legal Framework for the foreign exchange market and international capital (Law No. 14,286/2021) introduces important changes that will affect commercial contracts

On December 30, 2021, Law No. 14,286 (“Law No. 14,286/2021”), already known as the legal framework for the foreign exchange market and international capital was enacted. Some important changes provided for in the general provisions of Law No. 14,286/2021 may impact the negotiations of various commercial contracts, as noted below.

One of the changes brought by Law No. 14,286/2021 is the possibility of private offsetting of credits or amounts between residents and non-residents in Brazil, in certain cases (Article 12 of Law No. 14,286/2021), which was previously prohibited.

Situations in which the private offsetting of credits will be authorized are still subject to regulation by the Brazilian Central Bank (BACEN), however BACEN is already authorized to require residents to provide information on the private offsetting of credits, observing deadlines, required forms and other conditions provided for in the new Law.

Violations of the provisions of article 12 and of the regulations to be issued by BACEN  will result in penalties to be applied by BACEN, pursuant to the sole paragraph of art. 20 of Law No. 14,286/2021.

Another important innovation is the provision of article 13 of Law No. 14,286/2021, which allows for the stipulation of payment in foreign currency of certain obligations enforceable in the Brazilian national territory.

Thus, the stipulation of payment in foreign currency is authorized in the following contracts and obligations: (i) contracts and instruments referring to the foreign trade of goods and services, their financing and their guarantees; (ii) obligations whose creditor or debtor is a non-resident, including those arising from credit or leasing operations, except in lease agreements of properties located in the national territory; (iii) leasing agreements entered into between residents, based on fundraising from abroad; (iv) assignment, transfer, delegation, assumption or modification of the obligations referred to in items (i), (ii) and (iii) above, even if the parties involved are residents; (v) purchase and sale of foreign currency; (vi) indirect export referred to in  Law No. 9,529, of December 10, 1997; (VII) contracts entered into by exporters in which the counterparty is a concessionaire, licensee, authorized representative or lessee in the infrastructure sectors; (viii) situations provided for in the regulations issued by the Brazilian National Monetary Council, when the stipulation in foreign currency can mitigate the exchange risk or increase business efficiency; (ix) other situations provided for in the legislation.

It is important to note that the prohibition on stipulating payment in foreign currency for lease agreements of properties located in the national territory was maintained.

The sole paragraph of article 13 of Law No. 14,286/2021 is very straight forward in mentioning that the stipulation of payment in foreign currency made contrary to the provisions of the aforementioned article is null and void.

In view of the above modification, item I of the sole paragraph of article 1 of Law No. 10,192, of February 14, 2001, became effective with the following wording: “Art. 1 (…)

Sole paragraph. (…)

I – payment expressed in or associated to gold or foreign currency, except in the cases provided for by law or in the regulations issued by the Brazilian Central Bank; (…)”

Demarest’s contracts team is available to provide further information or clarification on the new legal framework and other related matters.